Oc cio roundtable mooney management imperatives for realizing value from cloud computing 2013 06 12

Center for Information Systems Research (CISR)Center for Information Systems Research (CISR)
© 2013 MIT Sloan CISR – Mooney, Ross & Reynolds
John G. Mooney
Department Chair and Associate Professor
Graziadio School of Business and Management
Pepperdine University
jmooney@pepperdine.edu
Research Affiliate
Center for Information Systems Research (CISR)
MIT Sloan School of Management
jmooney@mit.edu;
Research Fellow
Irish Centre for Cloud Computing and Commerce
Management Imperatives for
Realizing Business Value from Cloud Computing
This research was made possible by the support of MIT CISR sponsors and patrons.
Cynthia Beath, Peter Reynolds, Jeanne Ross, and Jarrod Phipps contributed to the research project.
June 12, 2013
Orange County CIO Roundtable

© 2013 MIT Sloan CISR – Mooney, Ross & Reynolds 1
CISR Research Patrons
A.P. Moller Maersk (Denmark)
AECOM
Aetna, Inc.
AGL Energy Limited (Australia)
Akamai Technologies
Allianz Global Corporate & Specialty
Allstate Insurance Co.
AMP Services Ltd. (Australia)
ANZ Banking Group (Australia)
Australia Post
Australian Taxation Office
Banco Bradesco S.A. (Brazil)
Banco do Brasil S.A.
BBVA (Spain)
Bemis Company, Inc.
Biogen Idec
Blue Cross Blue Shield of Massachusetts
BNP Paribas (France)
BP (U.K.)
BT Group (U.K.)
Canada Pension Plan Investment Board
Canadian Imperial Bank of Commerce
Capital One Services, LLC
CareFirst BlueCross BlueShield
Chevron Corp.
CHRISTUS Health
Chubb & Son
Commonwealth Bank of Australia
Credit Suisse (Switzerland)
DWS (Australia)
Encana Corp. (Canada)
Equinox Ltd. (New Zealand)
ExxonMobil Global Services Co.
Fidelity Investments
FOXTEL (Australia)
France Telecom
Holcim Brasil S.A.
Insurance Australia Group
International Finance Corp.
Itaú – Unibanco S.A. (Brazil)
Johnson & Johnson
Leighton Holdings Ltd. (Australia)
Level 3 Communications
ManpowerGroup
Marathon Oil Corp.
MetLife
NASA
New Zealand Govt.—GCIO Office
Nomura Research Institute, Ltd. (Japan)
Origin Energy (Australia)
Parsons Brinckerhoff
PepsiCo Inc.
Principal Financial Group, Inc.
Raytheon Company
Reed Elsevier
Schneider Electric Industries SAS
Sears Holdings Mgmt. Corp.
Standard & Poor’s
State Street Corp.
Sunoco, Inc.
Swiss Reinsurance Co. Ltd.
(Switzerland)
TD Bank (Canada)
Teck Resources Ltd. (Canada)
Tenet Health
Telstra Corp. (Australia)
Tetra Pak (Sweden)
Time Warner Cable
Trinity Health
United States Dept. of Health &
Human Services
United States Postal Service
Unum Group
USAA
VF Corporation
Westpac Banking Corp. (Australia)
Woolworths Limited (Australia)
World Bank
MIT CISR gratefully acknowledges the support and contributions
of its Research Patrons and Sponsors.
CISR Research Sponsors
The Boston Consulting Group, Inc.
EMC Corp.
Gartner, Inc.
IBM Corporation
Microsoft Corporation
Oliver Wyman, Inc.
Tata Consultancy Services
MIT CISR’s Mission
 Founded in 1974, MIT CISR delivers
practical, research-based insights on
how digitization enables enterprises to
thrive in a fast-changing global economy.
 MIT CISR engages its community through
research, electronic research briefings,
working papers, meetings, and executive
education.
2012 MIT CISR Research Projects
Doing Business Digitally
 Strengthening Your Digital
Business Model
 Building Digitized Platforms Can Be Slow:
What Are the Alternatives?
 Digital Innovation: Designing
Customer-centric Products and Services
Redesigning Organizations
for the Digital Economy
 The Next-generation Enterprise: Designing
for an Increasingly Digital Ecosystem
 Case Studies in Social Media Innovations
 BYOD: Radical Changes to Managing
Technology and the People and
Processes Relying on It
 Working Smarter: Seizing the
Opportunities Created by Ubiquitous Data
Rethinking the Role of the IT Unit
 Managing Your Firm’s Total Digitization:
The Next Frontier
 Business Complexity: Shifting IT
from Problem to Solution
 Managing IT Supply and Demand:
How to Build a World-Class
Service Organization
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© 2012 MIT Sloan CISR
1 December 2012

What exactly do we mean by Cloud Computing?
“Cloud computing is [an approach] for enabling
ubiquitous, convenient, on-demand,
network access to
a shared pool of configurable computing resources
that can be rapidly provisioned and released
with minimal management effort or service provider interaction”
US National Institute for Standards and Technology, 2011

Forrester’s Cloud Computing Taxonomy
Forrester, “The Evolution Of Cloud Computing Markets,” July 6, 2010

Cloud Adoption Case Study
“We want to reach $10 Billion in sales by 2015
with an even broader geographic footprint.”
—David Pyott, CEO, Q1 2010 Insight Magazine
“That’s Doubling our business in the next 5 years!!”
—Fred Orensky, (then) Head of Enterprise Architecture
Is our company ready for doubling the business?
Is our platform ready for doubling the business?
Will the business units wait for the IS organization?

Allergan Enabling Business Capabilities
 Key business capabilities required:
– Talent management
– Field sales effectiveness
– Rapid integration of acquisitions
– Cost management
– Strategic agility
 Key performance goals for the IS Organization
– Increase responsiveness to business needs
– Increase speed of deployment
– Reduce time-to-value realization
– Curtail proportional growth in IT budget
 Adopted a “Cloud First” policy to address these business needs
– Before buying or building new systems,
conduct a systematic review of whether a viable public cloud option exists
Sue-Jean Lin, CIO
“It’s not just efficiency that is
important; people take that for
granted. It’s business capability
enablement. But of the various
business capabilities we are
currently enabling, agility is key.”

2010: When Would Allergan Consider the Cloud?
High / Unmanageable Low / Manageable
Extent of Data Security Risk
ExtenttowhichtheProcessisa
DifferentiatingCoreCompetency
HighLow
Cloud Sweet Spot
Avoid Experiment
Single Tenancy
 Salesforce / Force
 SuccessFactors
 Taleo
 eLoyalty
 Omniture
 WebEx
 Akamai
 Google / Postini

Management Practices for Enabling “Cloud First” @ Allergan
Architecture
Review
 Technical Assessment
— Assures the solution’s
agility, reliability,
scalability, and alignment
to IS standards
 Security Review
— Assures that data is
secure in use, in flight,
and at rest
Vendor
Due Diligence
 Vendor Assessment
— Assures quality of service,
security, compliance, and
data portability
 System Risk Assessment
— Identifies vendor and
system risk profile
Vendor
Management
 Periodic Audit
—Recertification for
expanded services
—Renewal
—Data extraction
 Contract Mgmt.
—Inclusion of Security
and Privacy
addendum

2010-2012: Allergan’s Cloud Journey
2010 2012

Realized Business Benefits of Cloud Computing
 Increased responsiveness, speed of deployment, business agility
 Faster pace of adoption
 Improved reliability, frequency of updates, security
 Simplicity
 IT cost savings
 “Elastic” provisioning of “burst” computing & DR capacity
 Shifting CapEx to OpEx
 IT budget reallocation (from “build & run” to “deploy & exploit”)
 Better information (deep analytics, collective intelligence)
 Distribution of digital products and services
 Enablement of “web native” applications
(social, mobile, location-based, “BYOD”)
 Enablement of “loosely-coupled” multi-enterprise processes

Challenges to realizing the competitive benefits of cloud
 Data security concerns
 Legal/regulatory compliance
 Immaturity and instability of vendors
 Service reliability and business continuity
 Weak contracts, SLAs, and consequences for non-performance
 Integration and interoperability with on-premise systems
 Vendor lock-in and ambiguous data portability
 Loss of control
 Limited transparency
 Limited expertise, understanding, exemplars, and trust
 Long-term cost uncertainties
 Resistance: “SHeBeNoBiF”

Key question:
 What are the effective management practices
associated with realizing business value
from cloud computing,
while mitigating its challenges and potential risks?

Embrace the Inevitable!
Six Imperatives to
Prepare for Cloud Computing

Imperative #1: Re-define the IT value proposition
 Beyond business efficiency
to
business agility
 For the IT Unit,
beyond efficient provider of IT resources
to
agile provisioning of business capabilities and services

Imperative #2: Re-focus Enterprise Architecture
 From tightly-integrated enterprise-wide platforms
to
a hybrid of minimal core “on-premise” platform augmented by
loosely-coupled, modular, “on-demand” cloud services
 From technology artifacts
to
service interfaces
 Enabling experimentation at the edges and
consolidation at the core

Imperative #3: Re-allocate funding
 From CapEx
to
OpEx
 From Managing Technology Investments
to
Managing Value Realization

Imperative #4: Re-structure IT Governance
 Shift IT decision rights from centralized
to
distributed (including vendors)
 Ensure access to
(rather ownership of)
appropriate services and business capabilities

Imperative #5: Re-think the purpose of IT
 Beyond standardization for enterprise efficiency
to
accommodating user needs, personal work-styles
and technology preferences for empowerment and creativity

Imperative #6: Re-engineer the IT Organization
 From a dominant focus on “build and run”
to
brokering services,
integrating data,
and exploiting value

Implications for IT Professionals
“Adapt,
or become obsolete”

Announcing a new MBA degree in
Digital Innovation and Information Systems (“DIIS”)
at Pepperdine University’s Graziadio School
Launching in Fall 2013

DI-IS Curriculum Design
• Standard MBA core plus six designated DIIS electives:
– Digital Innovation and Strategic Transformation
– Business Analytics and Intelligence
– DIIS Portfolio and Project Management
– Business Process Analysis and Innovation
– Enterprise Architecture and Infrastructure Management
– Managing DIIS Security, Privacy, and Ethics
• Students may request to replace up to two of the above with
electives in managing teams, leadership, change management,
creativity, marketing, negotiation, quantitative analysis or an
applied research project.

Oc cio roundtable mooney management imperatives for realizing value from cloud computing 2013 06 12

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Oc cio roundtable mooney management imperatives for realizing value from cloud computing 2013 06 12